U-P has mixed report on finances

Union Pacific has announced good news and bad news on its financial front. U-P C-E-O Richard Davidson says net income was down for the first quarter of its fiscal 2004, but the price of the railroad’s stock went up. Earnings on U-P’s stock were five-cents-per-share better in the first quarter. In addition, Davidson says there was “exceptionally strong” demand for the rail-line’s services. But Davidson conceded a big financial setback came when the Arkansas Supreme Court upheld a 30-million-dollar judgment against the railroad. With accumulated interest, Davidson says the railroad will owe nearly 36-Million dollars. While U-P is appealing the case to the U.S. Supreme Court, it recorded the 36-million judgment on its books as a loss for the first quarter. An Arkansas man riding in a garbage truck that was struck by a train sued Union Pacific, charging that the railroad didn’t clear overgrown brush that blocked the view at the railroad crossing where trains crossed at speeds as high as 60 miles an hour. The Arkansas Court has upheld the 30-million dollar judgment that man won. A hiring frenzy was another factor in U-P earnings during the first quarter of 2004. Davidson says with the country facing war early in 2003 the U-P stopped hiring, anticipating a third year of a flat economy. In 20-20 hindsight, he says the railroad didn’t hire enough people fast enough to meet demand once the economy started recovering, and though traffic volume was flat for three-quarters of the last year, he says it rose faster in this recent quarter than customers or the U-P had expected. The railroad’s started hiring in recent weeks, but Davidson says U-P couldn’t add staff quickly enough to satisfy the surging demand for railroad shipping services. Davidson says there’s a long “lead time” between the hiring of new crew and engineers and when they’re finally trained and ready to work on the railroad. The Union Pacific’s even borrowed staff from other railroads to keep up with the demand. He says a harsh winter slowed the trains and put extra demand on crews, cars, terminals and the railroad lines. Davidson says shipping volume rose nine-percent just in the month of March, especially for commodities being shipped to and from the West Coast…where the crew shortage is greatest. He says hiring and training continue at “a significant rate” but while U-P added almost 1000 people to the payroll, the railroad could hardly keep up. Despite all the headaches, U-P saw record revenues of two-point-nine Billion dollars and Davidson says the company saved almost 40-million in taxes by moving many of its personnel from Missouri into Nebraska and Texas.